Correlation Between American Century and Income Fund

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Can any of the company-specific risk be diversified away by investing in both American Century and Income Fund at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining American Century and Income Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Century Strategic and The Income Fund, you can compare the effects of market volatilities on American Century and Income Fund and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in American Century with a short position of Income Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and Income Fund.

Diversification Opportunities for American Century and Income Fund

0.97
  Correlation Coefficient

Almost no diversification

The 3 months correlation between American and Income is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding American Century Strategic and The Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Income Fund and American Century is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on American Century Strategic are associated (or correlated) with Income Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Income Fund has no effect on the direction of American Century i.e., American Century and Income Fund go up and down completely randomly.

Pair Corralation between American Century and Income Fund

Assuming the 90 days horizon American Century Strategic is expected to generate 1.44 times more return on investment than Income Fund. However, American Century is 1.44 times more volatile than The Income Fund. It trades about -0.26 of its potential returns per unit of risk. The Income Fund is currently generating about -0.39 per unit of risk. If you would invest  682.00  in American Century Strategic on July 4, 2022 and sell it today you would lose (48.00)  from holding American Century Strategic or give up 7.04% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

American Century Strategic  vs.  The Income Fund

 Performance (%) 
       Timeline  
American Century Str 
American Performance
0 of 100
Over the last 90 days American Century Strategic has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, American Century is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

American Price Channel

Income Fund 
Income Performance
0 of 100
Over the last 90 days The Income Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest unfluctuating performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Income Price Channel

American Century and Income Fund Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with American Century and Income Fund

The main advantage of trading using opposite American Century and Income Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century position performs unexpectedly, Income Fund can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Income Fund will offset losses from the drop in Income Fund's long position.
American Century vs. American Express
The idea behind American Century Strategic and The Income Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
Income Fund vs. American Express
Check out your portfolio center. Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try Fund Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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